Milbourne v. JRK Residential Am., LLC

• Decision Date: 10 March 2015
• Docket Number: Civil Action No. 3:12cv861.
• Citation: 92 F.Supp.3d 425
• Parties: Derrick A. MILBOURNE, On his own behalf and On behalf of those Similarly situated, Plaintiff, v. JRK RESIDENTIAL AMERICA, LLC, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

92 F.Supp.3d 425

Derrick A. MILBOURNE, On his own behalf and On behalf of those Similarly situated, Plaintiff

v.JRK RESIDENTIAL AMERICA, LLC, Defendant.

Civil Action No. 3:12cv861.

United States District Court, E.D. Virginia, Richmond Division.

Signed March 10, 2015.

Filed March 11, 2015.

Leonard Anthony Bennett, Susan Mary Rotkis, Consumer Litigation Associates, Newport News, VA, Casey Shannon Nash, Matthew James Erausquin, Consumer Litigation Associates PC, Alexandria, VA, Thomas Ray Breeden, Thomas R. Breeden PC, Manassas, VA, for Plaintiff.

George Peter Sibley, III, Thomas Richard Waskom, Hunton & Williams LLP, Richmond, VA, Shon Morgan, Quinn Emanuel Urquhart & Sullivan LLP, Los Angeles, CA, for Defendant.

MEMORANDUM OPINION

ROBERT E. PAYNE, Senior District Judge.

This matter is before the Court on the DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (Docket No. 47), the Plaintiff's response (Docket No. 53) and the reply (Docket No. 57). For the reasons set forth below, the motion will be denied.

FACTUAL BACKGROUND

Derrick A. Milbourne (“Milbourne”) filed a complaint on behalf of himself and all others similarly situated that alleged that Defendant JRK Residential America, Inc. (“JRK”) violated two sections of the Fair Credit Reporting Act (“FCRA”). Milbourne applied for and conditionally received a job with JRK after completing application paperwork that permitted JRK to obtain a consumer report on Milbourne. Docket No. 1 at 1. After JRK obtained Milbourne's consumer report, it rescinded its offer to hire Milbourne. Id. In this action, Milbourne alleges that JRK did not comply with the FCRA's requirements “in that JRK did not provide [Milbourne] a copy of the report that was used as a basis for rescinding the offer of employment; that JRK did not provide him with the notice it was required to give before requesting the report; and that JRK did not provide him with a description of his rights under the FCRA.” Docket No. 19 at 1–2.

PROCEDURAL BACKGROUND

The procedural background of this case through April 7, 2014 is extensively set forth in the Court's Memorandum Opinion denying Defendant's Motion to Dismiss for Lack of Jurisdiction. Docket No. 19, at 3–5. Thereafter, the Court certified two classes, the “Impermissible Use Class” (alleging a violation of 15 U.S.C. § 1681b(b)(2)(A)¹ ) and the “Adverse Action Class” (alleging a violation of 15 U.S.C. § 1681b(b)(3)(A)² ). Both classes were certified based on a 2 year statute of limitations. Docket No. 55.

DISCUSSION

Summary judgment is proper when there is no genuine issue as to any material fact in the case such that the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). Once the moving party properly files and supports its motion for summary judgment, the opposing party must show that a genuine issue of fact exists. See Matsushita Elec. Indus. Co v. Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

A material fact is the existence or non-existence of which could lead a jury to different resolutions of the case.See Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue of material fact only exists when the opposing party has presented sufficient evidence upon which a reasonable jury could return a verdict in its favor. Id. This means that “summary judgment is only appropriate when, after discovery, the non-moving party has failed to make a ‘showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.’ ”

BM v. Chesterfield County School Dist., 2010 WL 1445661 at *1 (E.D.Va.2010) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). In considering motions for summary judgment, the court must consider the evidence in the light most favorable to the non-moving party. Smith v. Virginia Commonwealth Univ., 84 F.3d 672, 675 (4th Cir.1996).

JRK moves for summary judgment on four issues. First, it argues that “the claims of the ‘Impermissible Use Class' fail because JRK's authorization forms complied with both the letter and spirit of the FCRA.” Docket No. 48 at 1. Second, it argues that, even if its authorization forms did not comply with the FCRA, “there is no triable issues that JRK acted ‘willfully.’ ” Id. at 2. Third, it argues that “[t]he Adverse Action claim ... fails because the class members have no private right of action under [the] FCRA provision” at issue. Id. Finally, it argues that “plaintiffs have ... failed to show willfulness” in conjunction with the Adverse Action Class as well. Id. These arguments will be addressed in turn.

I. JRK's Disclosure Form's FCRA Compliance

15 U.S.C. § 1681b(b)(2)(A) requires that, “[e]xcept as provided in subparagraph (B) [dealing with applications for employment by mail, telephone, or computer], a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes, with respect to any consumer, unless: (i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and (ii) the consumer has authorized in writing (which authorization may be made on the documents referred to in clause (i)) the procurement of the report by that person.” (emphasis added).

When Milbourne applied for a position with JRK, he signed a document that read, in part:

I certify that the information contained herein is true and understand that any falsification will result in the rejection of my application or termination of my employment. I also understand that the requested information is for the sole purpose of conducting a background investigation which may include a check of my identity, work and credit history, driving records, and any criminal history which may be in the files of any state or local criminal agency ...³

I hereby authorize this company, its corporate affiliates, its employees, its authorized agents, and representatives ... to verify all information contained in this form or in my application and to inquire into any character, general reputation, personal characteristics, and mode of living ... I hereby release this company, its corporate affiliates, its employees, its authorized agents and representatives and all others involved in this background investigation from any liability in connection with any information they give or gather and any decisions made concerning my employment based on such information. I understand that any offer of employment I may receive is contingent upon the successful completion of the background investigation. I further understand that I have a right, under Section 606(B) of the Fair Credit Reporting Act, to make a written request to this company within a reasonable period of time for a complete and accurate disclosure of the nature and scope of the investigation requested.⁴

Docket No. 49–2 at 2 (emphasis added). Milbourne alleges that the release language (underlined above) violates § 1681b(b)(2)(A)'s “solely of the disclosure” requirement and thus violates the FCRA. JRK claims that its form is compliant with the FCRA and for that reason seeks summary judgment.

A. Parties' Positions

(i) JRK's Arguments

JRK puts forth several theories in support of its argument that the phrase “solely of the disclosure” does not mean what it says. First, JRK states that “[c]ourts in the Fourth Circuit are split as to whether the inclusion of a release violates the ‘solely of the disclosure’ language of § 1681b(b)(2)(A).” Docket No. 48 at 7 (comparing Smith v. Waverly Partners, 2012 WL 3645324, at *5–6 (W.D.N.C.2012) with Singleton v. Domino's Pizza, 2012 WL 245965, at *9 (D.Md.2012) ). In Smith, on which JRK relies, the court stated, in dicta, that a waiver clause resembling the one at issue here was “invalid ... [but] was not so great a distraction as to discount the effectiveness of the disclosure and authorization statements [which were] ... otherwise adequate.” Smith, 2012 WL 3645324 at *6. Thereupon, the court held that, although the “solely” text in the FCRA rendered the waiver ineffective, but it did not otherwise cause noncompliance with the FCRA's requirements.

Second, JRK makes a policy argument based on the purpose of the FCRA. It argues that § 1681b(b)(2)(A)'s “solely” requirement “is intended to ensure consumers are not ‘distracted by other information side-by-side with the disclosure.’ ” Docket No. 48 at 7 (citing FTC letter dated September 9, 1998 to H. Rowan Leathers). From that premise, JRK argues that Milbourne has not alleged that the disclosure at issue had any negative effect on consumer understanding. Thus, says JRK, if the statute is read so that the disclosure at issue violates the FCRA, it would “pervert Congress's purpose ... [by] mandate[ing] specific disclosure language” and would “deprive companies of fair guidance when trying to comply” with the FCRA. Id. at 8.

Lastly, JRK makes several statutory language-based arguments for its interpretation of § 1681b(b)(2)(A). It first contends that the “solely of the disclosure” language contained in § 1681b(b)(2)(A)(i) cannot mean what it says because, in § 1681(b)(2)(A)(ii), the FCRA explicitly allows the authorization for the consumer report to appear on the same document as the disclosure. Docket No. 57, at 10. Thus, “Milbourne's proposal to define ‘solely’ to mean ‘to the exclusion of all else’ cannot be reconciled with the FCRA's explicit allowance of information besides the disclosure on the same document.” Id. at 10–11. Then, JRK finds significant that “no specific terms are required for the disclosure or the authorization” in the FCRA. Id. at 12. Instead, “the statute provides the disclosure need only be ‘clear and conspicuous.’ ” Id. And, according to JRK, “the ‘solely of the disclosure’...